Thanks for this forum - great idea. Just got plugged into this blog a month ago and have read almost 3/4s of the content, finding it all very helpful and encouraging. My question is about the order in which to accomplish certain financial goals. Obviously there's no one right answer - I'm really hoping for several perspectives here.
My wife and I (age 32) have been paying off debt at an amateur speed (moderate to fast compared to society at large; much slower compared to the mustachioed bunch here) the last few years. I just finished grad school (an MFA) which we paid for out of pocket so as to not go in debt; so that slowed us down for the last 2 years. Our remaining debt is currently $15K in student loans left for my wife (consolidated - $3k is unsubsidized @ 5%; the other $12K is subsidized @3.5%) and our mortgage (which we refi-d in '09 @4.75% to reduce mo payment; currently the balance on that is about $138K). She's about to roll her $34K 401k from the job she just left into a Vanguard IRA; I'm just getting started with retirement savings and am going to start contributing ~7% of my salary to my 401k, 1/2 of which will be matched out the gate by my employer. We have $1K in emergency savings (which we're hoping to build up to around $10-$12K in the not-too-distant future) and typically generate a monthly surplus of about $1K. I've also been completely transformed by the knowledge of the index fund, and would like to get into a Vanguard index fund asap. I'm a complete newbie to investing, and am still finding my way around the terminology; mostly with blogs like this and books like Malkiel's Random Walk. I know nothing, so my learning curve is steep at the moment.
Currently we have about $10K in savings built up from the last several months, but Murphy is conspiring against us, primarily in the following two ways:
1. our tub starting leaking into the living room (we're using the basement bathroom in the meantime while I re-caulk, which could buy us another year or two [tub was installed wrong originally])
2. multiple repairs on our high mileage civic, with a head gasket problem looming (mechanic is recommending we get a new car within the year)
I'm not naturally gifted with my hands. I'm trying to become more of a basic Mr. Fixit (will be installing a new dishwasher for the first time to save the $100 install cost - another case of Murphy striking this month - in the next week), but I'm generally clumsy and get frustrated by the time/effort it takes me to do anything beyond basic. And since I work full-time and really enjoy spending time with my wife, child and friends, I generally trade the $ for a pro for the quality time I get out of it - tho i'm learning to be more selective about what services I can do on my own (ie dishwasher) and what needs a pro.
So, given all that financial spillage above - what course of action do all you whisker-wise prognosticators suggest I take to make the most out of my financial situation? Specifically, when should I initiate what, and what should I do simultaneously and/or what should I avoid doing simultaneously? For example, do we pay off the student debt before building up a 3-6 mo savings? We're seriously thinking of moving in the next 5 years, so how much does it make sense to pay down extra on the house; if so, how much, and when? Should I wait to open an index fund until the other stuff is rolling? What say ye?
Thanks in advance for any consideration and advice - much appreciated. And esp thanks to Mr and Mrs MM for being so generous with their experience/knowledge, and providing this smart forum.